According to the Statista Global Consumer Survey, 63% of UK adult survey respondents revealed that they consume coffee regularly – the same percentage as tea. Further, in a survey done by Statista, approximately a quarter of respondents stated that they usually drink coffee in either a café or a coffee bar. Both of these survey results are great news for the foundation of the UK café franchise industry.
Café Franchise Industry Overview
Franchises in this area are in a food franchise industry segment ripe for investment, with their value growing rapidly and businesses getting more creative with their offerings. Coffee addiction seems to be going nowhere, and providing busy folks with their daily fix can prove another very profitable option for business owners.
Café franchises nowadays just don’t sell coffee, however. High quality pastries and snacks along with less elaborate meal options, typically sandwiches and related items, are often part of the menu as well.
Pandemic restrictions related to the “non-essential” store closures during national lockdowns had a major effect on the industry in 2020-21 with establishments located in certain areas – such as near shopping centres, around office buildings and travel hubs – the most impacted.
However, according to industry observers, the lifting of restrictions, improving economic conditions and strong pent-up demand for going out are expected to support revenue growth going forward. In addition, government programs designed to support the hospitality sector, including VAT cuts and the now-lapsed Coronavirus Job Retention scheme, should help in aiding a quicker recovery.
Here’s what market research company IBISWorld has to say about the future of the cafes and coffee shops industry in the UK:
<blockquote>As economic conditions continue to recover from the downturn caused by the COVID-19 (coronavirus) pandemic, consumer confidence and disposable incomes are forecast to improve, raising spending on industry products. However, competition from fast-food restaurants and pubs offering coffee is expected to constrain expansion. Additionally, during the pandemic, some consumers have discovered how much they can save by buying coffee for at-home consumption instead of visiting cafes and coffee shops, which could hinder future demand.</blockquote>
Café Franchise Industry Trends
When it comes to trends that are poised to shape the future of the café industry, you can first look towards a big trend in the general food franchise industry: the demand for vegan, vegetarian and gluten-free products. “If I were to say what is the — probably the most dominant shift in consumer behaviour is this whole shift to plant-based. And that is a shift both in beverage and in food,” former Starbucks CEO Kevin Johnson said in February 2021.
Further, over the past couple of years particularly, café and coffee shops have had to adapt and get used to different ways of doing business. Related to the changes the last couple of years have brought about or accelerated, here are some other trends in the café franchise industry:
- Mobile and van-based franchises are more popular and numerous than ever.
- Consumers are more accustomed to flexible and digital services.
- There’s been a significant increase in subscription and delivery-based services.
- Businesses are being built with sustainability and lessening their carbon footprints more in mind.
What You Should Seek When Choosing a Café Franchise
People buy into food franchises for many different reasons. Suppose you are enthusiastic about owning your own business and offering various tasty treats and beverages to the community, but can’t quite come up with a business idea of your own. In that case, franchising may be the best method for making your dreams come true.
When deciding which café franchise to invest in, you should compare how much and what types of support the franchisors offer on an initial and ongoing basis. The most common services offered by the franchisor include but are not limited to the following:
- Advertising and marketing strategy
- Advice and business support
- Assistance in choosing and developing the franchise location
- A well-known brand name
- Headquarters and field support
- Management training
- Operating manuals
- Quality food standards
- Research and development of new foods and services
With a recognisable brand name and logo, high-quality signage, and other support materials provided by the franchisor, you will be able to focus your efforts on the everyday aspects of running the business. This includes staffing and managing the company and ordering supplies, and selling and passing on the product.
It’s important to remember that even with the guidance and support, franchises are independently-owned businesses. Therefore, whether your café franchise is a success or failure is based entirely on you and your ability to run the company.
Finding the Money: Franchising vs Independent Businesses
Investing in a franchise is often considered a safer option than creating an independent business from the ground up. This is certainly the case for lending institutions, franchises have been more likely to appeal to banks and moneylenders and draw the necessary capital to start the business since franchises have a demonstrated history of feasibility and market sustainability.
Independent companies often find it a challenge to obtain loans with sensible borrowing rates since they have no evidence that their business will reach potential. This lack of faith from lenders has the potential to jeopardise their company from the start.
Having enough money before you start is important. The first couple of years of any business can bring challenges, placing most independent businesses at imminent financial risk. Without the ability to generate enough revenue to cover initial and operating expenses, independent business owners will likely find the venture unviable. In fact, more than half of all independent start-up companies go out of business within the first two years in the UK.